Alvarez and his father are most widely known for their discovery (with Frank Asaro and Helen Michel) that a clay layer occurring right at the Cretaceous-Tertiary (K-T) boundary was highly enriched in the element iridium. Since iridium enrichment is common in asteroids, but very uncommon on the Earth, they further postulated that the layer had been created by the impact of a large asteroid with the Earth and that this impact event was the likely cause of the K-T extinction event.

This iridium enrichment has now been observed in many other sites around the world. And further, the very large Chicxulub crater was identified and is now regarded as the definitive evidence of a large impact. Consequently, a majority scientists now accept the impact scenario as the most likely cause for the K-T extinction event which occurred 65 million years ago and eliminated 85% of all species, including all of the dinosaurs.

In additional to his interest in extinction events and impacts, Alvarez has contributed to the understanding of Mediterranean tectonics, Roman geology and archeology, and the establishement of magnetostratigraphic correlations.